With the rising prices of everyday life, more and more people are finding that their pension savings together with the state pension are not providing sufficient income to meet all their needs in retirement. If you don’t have sufficient savings and assets to draw on, releasing equity from your home could be a good way to help boost your pension. We strongly advise you take professional Independent Financial Advice before entering into any such arrangements.
There are two main types of equity release plans: lifetime mortgages and home reversion plans.
Lifetime mortgages allow you to take out a loan on your property in return for a tax-free lump sum, an income or a combination of the two. Much like a standard mortgage, the loan is secured against your property and you continue to own your own home. The amount you can release depends on a combination of your age, health and the value of your property. You can either pay monthly interest on the loan or you can allow the interest to roll up over time. The loan and the rolled-up interest are repaid either when your home is sold on your death, or if you move into long-term care. Both members of a couple are covered, so if one goes into long term care before the other, the other party can remain in the house until they either die or move into long term care themselves.
Home reversions plans involve selling all or part of your home to a company in return for a lump sum or regular income, and the right to remain living in the property. When you die or move into long-term care, the provider will be entitled to its share of the property’s value at the prevailing market rate. The balance of the property that you didn’t sell goes to your estate.
An equity release plan will reduce any inheritance that you decide to leave. You should talk to your financial adviser about these risks if you are at all unsure.
PRISM believes in and abides by the beliefs and rules of The Equity Release Council. The Equity Release Council is the industry body for the equity release sector, representing the providers, qualified financial advisers, lawyers, intermediaries and surveyors who work in the equity release sector. A major focus of the Equity Release Council’s work is to ensure that products are safe and accessible for consumers. Each member of the Council that provides equity release products is signed up to the Equity Release Council’s Code of Conduct which puts in place a number of safeguards and guarantees for consumers. This means that people who use equity release products offered by Equity Release Council members can have confidence in the products they use and the information they receive.
Your home maybe repossessed if you do not keep up repayments on your mortgage.
The Financial Conduct Authority does not regulate Conveyancing.